A raft of corporate news flow required digestion today, first were the merger talks between the general miner Xstrata and the commodity trading group Glencore, which already holds a 34% stake in the former. It was announced today that Xstrata had received an approach from Glencore, which now has until March 1stto make a formal offer, a proposition that would form an $80 billion entity.
There was also a raft of earnings releases; Smith & Nephew’s was the best received with shares up 4.5% by the London close. The medical device maker posted pre-tax profits slightly ahead of expectations and reiterated its guidance for 2012. At the other end of the spectrum however AstraZeneca and Unilever were tussling for the worst performing stock on the index after their full year results. Unilever, the consumer goods group owning a plethora of brands including Persil, TRESemme, Comfort and Hellmann’s, posted number below expectations largely as a result of restructuring costs, low volumes and margin contraction in Homecare that didn’t make for a favourable outlook. Whilst results from the UK’s second biggest drug maker AstraZeneca were in line with expectations, the loss of exclusivity on key drugs and government reimbursement pressures going forward highlighted the difficult environment for 2012 and beyond. The announcement of increased share buy backs and an increased dividend were not sufficient to offset the concerns regarding next year’s low double digit revenue decline, which saw the shares finish the day down 3.4% to 2984p, slightly better than Unilever’s 4.4% loss.
The market opened and initially traded in negative territory although experienced a noticeable improvement around midday in response to US jobless claims that showed new filings for unemployment benefits fell 12,000 last week to 367,000. Whilst the jobs market is still far from strong in the US, the data added to a general feeling of improvement ahead of tomorrow’s key non-farm payrolls. The FTSE100 came off its highs towards the end of the day to eventually finish 0.1% better off at 5796.